A series LLC offers unparalleled flexibility, simplicity, and economy for any investor or businessperson with multiple properties or enterprises. It allows its owner to hold assets and liabilities within separate compartments or “series” that effectively operate as sub-companies. The Texas series LLC or Nevada series LLC shares characteristics with the traditional LLC, including the benefit of informal management, an effective liability shield, and pass-through taxation; but the series LLC also has the ability to segregate assets and insulate them from liability arising from other assets within the same company. How does this differ from a traditional LLC? In the case of a judgment against a traditional LLC, all assets of the LLC are exposed for purposes of satisfying that judgment. Not so with a series LLC. Note that a series LLC operates and acts exactly the same as a traditional LLC until the individual series are implemented. Acquiring a series shelf LLC therefore preserves a certain level of flexibility for future operations.
The series LLC is particularly effective when used as part of this firm’s recommended two-company structure – i.e., one LLC which operates as a shell management company that deals with tenants, vendors, contractors, and the rest of the public (and therefore risks lawsuits); and the other a stand-alone “holding company” that owns the hard assets and stays quietly in the background. Our real-world courtroom experience indicates that the holding company in this structure – which has legal privity with no one – is nearly impossible to successfully sue.